The only people winning out are the people being paid to demolish the homes.  The banks are destroying the collateral for defaulted loans.  The local government, for its want of fines, now misses out on tax revenue.  A person who would have bought the home at the right price no longer can.

Banks and local governments are playing monetary chicken with vacant homes.  Banks must either maintain the homes acceptably — a cost they’ll likely never get back — or face fines.  Local governments turn up the heat and expend effort to get the banks to maintain the properties, or else they become run-down and desirability of surrounding properties goes down, squatters move in, etc.

In this town, the banks flinched.  But neither the banks nor the town will win here.

What may make the foreclosure situation worse is that some communities and homeowners’ associations are clamping down on owners’ rights to rent their properties.  Without the option to rent out, owners are forced to carry the full weight of their mortgage payments until they can sell — or until they’re foreclosed on.  It’s simply HOAs looking after their interests, but it’s at the expense of strapped homeowners.

The 700,000 REO properties is huge.  That will take a while to burn off, and home prices will go down when they hit market.

No one’s immune.  If you’re not being foreclosed on, someone near you probably is, and that affects the value of your house and your neighborhood.

Falling property values in neighborhoods with abandoned houses makes sense.  Increased crime due to vandalism of abandoned properties make sense.  Increased occurrences of the West Nile virus from abandoned swimming pools makes sense once the pieces are put together, but that was probably beyond most people’s thoughts.  I know it didn’t occur to me.  Makes you wonder what else is down the road as the mortgage mess unravels.  I’m sure there will be more problems.